Draft Electricity (Amendment) Bill, 2020

Key Facts:-

• Few states have voiced their concerns against the proposed bill. These include-West Bengal, Punjab, Puducherry, Kerala, Rajasthan, Jharkhand, Chhattisgarh, Maharashtra, Delhi, Telangana, and Andhra Pradesh.
• They called the draft Bill a violation of “the spirit of co-operative federalism” and accused the Centre of failure to consult the States on the Bill since electricity is on the Concurrent List.

Contentious clauses in the Bill:

• The Bill seeks to end subsidies. All consumers, including farmers, will have to pay the tariff, and the subsidy will be sent to them through direct benefit transfer.
• States are worried about this clause because:
• This would mean people would have to pay a huge sum towards electricity charges while receiving support through direct benefit transfer later.
• This would result in defaults leading to penalties and disconnection.
• The draft also “divests” the States of their power to fix tariff and hands over the task to a Central government-appointed authority.
• This is discriminatory since the tariff can be tweaked according to the whims and fancies of the Central government.
• Another provision makes it compulsory for the State power companies to buy a minimum percentage of renewable energy fixed by the Centre.
• This would be detrimental to the cash- strapped power firms.

Additional information:

• The Electricity Act, 2003 has governed the laws regarding the generation, distribution, transmission, trading, and use of electricity so far.
• But, experts around the country have opined that some of the provisions of the Act have become dated and archaic, needing an update.
• To address some recurring issues, and to promote further commercial incentives for private players to enter the market, the Electricity (Amendment) Bill, 2020 was introduced in April this year.

Highlights of the Bill:

• Policy Amendments:
• Renewable Energy: It delegates the Central Government with the power to prepare and notify a National Renewable Energy Policy “for promotion of generation of electricity from renewable sources”, in consultation with State Governments.
• Cross Border Trade: The Central Government has been delegated with the power to prescribe rules and guidelines to allow and facilitate cross border trade of electricity.
• Creation of Electricity Contract Enforcement Authority: It has been proposed to be given sole jurisdiction to adjudicate upon matters on the performance of obligations under a contract regarding sale, purchase, and transmission of electricity, which exclusion of this specialized authority’s jurisdiction on the determination of tariff or any other dispute regarding tariff.
• Functional Amendments:
• Payment Security: It proposes a mechanism wherein “no electricity shall be scheduled or despatched under such contract unless adequate security of payment as agreed upon by the parties to the contract, has been provided”.
• Constitution of the selection committee to recommend members for commissions/ authorities: There is a slew of provisions for the constitution of a Selection Committee for making recommendations of members to the Appellate Tribunal and the Chairperson and Members of Central Commission, Electricity Contract Enforcement Authority, State Commissions and Joint Commissions.
• Grant of Subsidy mandated: The benefit of subsidy to be granted directly to the consumer and the licensee shall charge the consumers as per the tariff determined by the Appropriate Commission. The determination of tariffs shall be fixed by the commission without accounting for subsidies. Further, basis the tariff policies, surcharges, and cross-subsidies shall be progressively reduced.
• Inclusion of Distribution Sub-licensee and Franchisee: To ease the burden of distribution licensees and to promote some form of demographic specialization, the distribution licensees, can appoint another entity for distribution of electricity on its behalf, within its area of supply.
• Enhancement of the powers of the Appellate Tribunal of Electricity: APTEL is proposed to have the powers of a High Court to deal with wilful disobedience of persons and entities under the Contempt of Courts Act, 1971. Additionally, any person can appeal the decisions of the Authority which is introduced by this Amendment in front of the APTEL. The numbers of members at the APTEL have also been proposed to be increased by the Amendment.
• Applicable to the whole of India: It is needless to mention, that in addition to the above mentioned broad themes that the Amendment seeks to cover, the Act shall now apply to the territory which was erstwhile exempted from the State of Jammu and Kashmir.

Composition and powers of Electricity Contract Enforcement Authority:

• The Authority will be headed by a retired Judge of the High Court.
• It is proposed to be set-up with powers of the Civil Court.
• It will enforce the performance of contracts related to purchasing or sale or transmission of power between a generating, distribution, or transmission companies.

Source: The Hindu